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A House Near the Beach That Pays For Itself

It’s easy to find an overseas property that you’ll love spending time in. But it’s much more difficult to find one that will either cover its running costs or make a handsome profit.

We’ve pinpointed three locations with strong rental potential. Two of them would make fantastic second home destinations. The third would suit investors looking for a mix of good potential rental yield and appreciation.

Location #1. It’s a tropical paradise where powder beaches fringe clear turquoise seas. You can get here from many destinations in North America in just half a day (including flight time). You’ll find culture, history, entertainment and shopping on your doorstep.

It’s a tourist hot spot; occupancy rates for this summer season should average 90%. And the government plans to bring in even more tourists to this location—increasing the number of visitors three-fold or more.

Yet a lack of suitable land and strict planning laws limit future development. You can buy luxury condos in this location from $182,000. Your home here should rent easily. But you might just want to keep it all to yourself…

Location #2. This Caribbean island offers sun-drenched beaches, chic eateries and a laid-back lifestyle. It’s very close to North America—only a two-hour flight from Miami. Better yet, it’s very affordable…if you know where to look.

You won’t find big chain-hotels in this location. It’s popular with foreign tourists and locals as a vacation spot. And it’s about to become even more popular, thanks to a new road that opened two months ago.

Condo pricing in this hot spot starts at $71,000. And homes here can earn double-digit rental yields. One three-bedroom house on the market for $285,000 earned $25,580 net rental income in 2010 (that’s the total rental income minus all the running costs). That works out to a very healthy 9% net based on the current asking price.

Location #3. This is more of an investment play. It’s a city with three million residents—and it’s on a roll. It’s the country’s top domestic tourist destination, with its finest beaches and a buzzing nightlife. It’s a top spot for foreign investment. And it packs a punch when it comes to business and industry. A new free-trade zone, an expanding port and new power plants are all bringing businesses and even more jobs to the area.

It’s very difficult to find a quality rental here. The rental market, both short- and long-term, is strong. This opportunity (with condos from $120,000) targets local middle-class professionals who want to rent a furnished condo long-term. It could generate 10% a year. The area is undervalued right now, so you should also get good appreciation. Best of all, although the condos are completed, you can still take advantage of developer financing.